Yellen comfortable with her soft landing projection for the US

Treasury Secretary Janet Yellen said she is increasingly confident that the United States will be able to contain inflation without further damage to the labor market, praising data showing a steady slowdown in inflation and a new influx of job seekers.

“I feel very good about that prediction.Yellen said on Sunday when asked about her earlier hopes that the United States would avoid a recession while controlling increases in consumer prices. “I think it would have to be said that we are on a path that looks exactly like that”.

In an interview on her plane as she returned from the Group of 20 summit in New Delhi, the Treasury chief also downplayed any risk from China’s efforts to increase the influence of the BRICS group, made up of major emerging nations. “The G20 remains the main forum for global cooperation“, he claimed.

Yellen and President Joe Biden attended the meeting, which Chinese President Xi Jinping was absent. Headline inflation has slowed toward 3% (although still above the Federal Reserve’s 2% goal), without any decline in payrolls or GDP.

“All inflation indicators are on the way down”Yellen said. He also noted that while the U.S. unemployment rate rose in August after reaching the lowest levels in more than half a century earlier this year, that rise was not caused by a large wave of layoffs.

The unemployment rate hit 3.8% last month, due in part to a rise in the labor force participation rate to the highest level since February 2020, just as COVID was beginning to spread.

Seeing some slack in the labor market is “something important and good” and “It is a clear advantage” which is because more people are looking for jobs, Yellen said.

The data marks a validation of sorts for the Treasury chief, who has consistently said over the past year that she expects inflation to reach the Federal Reserve’s 2% target without an increase in unemployment.

While other figures show steady increases in consumer spending and signs of stabilization in the housing market despite a rise in mortgage rates, economists have been abandoning or postponing their bets on a recession.

The positive signs for the United States have contrasted with disappointing data from China that has suggested the world’s second-largest economy may fall short of Beijing’s target of 5% growth this year.

Divergent data from the two economies has contributed to the Chinese currency depreciating against the dollar, with the yuan falling to a record low last week. This has led Beijing to take a series of measures to curb the casualties. Yellen noted that such measures are understandable.

Regarding China’s recent push to expand the BRICS group to include six new members, Yellen noted that that assembly has nations with “highly divergent interests”.

India, which hosted the G20 summit and is also a member of BRICS, has a long-running border dispute with China, and Xi’s absence from the New Delhi meeting this weekend fueled speculation of a snub to his giant neighboring country.

The United States has “a series of strong and strengthening alliances” with several BRICS-11 countries, including recent biofuels cooperation involving Brazil and South Africa, Yellen said. She also noted the importance of the G20’s work in recent years on global challenges, including health, food security and loans.

The United States’ push into emerging markets has also involved deepening ties with Vietnam, a consumer electronics hub that has its own border tensions with China. Biden headed to Vietnam after his stop in India, and Yellen previously traveled this summer.